May 23 (Bloomberg) -- Hon Hai Precision Industry Co., the
maker of Apple Inc. iPhones and iPads, tumbled to the lowest in
almost two years in Taipei trading after an explosion at a
factory in Chengdu, China, killed three workers.

The company, Foxconn Technology Group’s flagship unit,
dropped as much as 5.2 percent to NT$97.70, the lowest since
August 2009. In Hong Kong, handset-manufacturing unit Foxconn
International Holdings Ltd. tumbled as much as 5.7 percent.

The maker of Apple Inc.’s iPhones and iPads said the
explosion, which also left 15 employees injured, started with
combustible dust at about 7 p.m. on May 20. The incident comes a
year after a spate of suicides at Foxconn’s main manufacturing
base in Shenzhen prompted the electronics maker to raise wages
and move more Chinese production inland.

“We expect Hon Hai’s original facilities in Shenzhen could
quickly make up some of the shortfall from Chengdu by ramping up
the idle capacity,” Kirk Yang, an analyst at Barclays Capital
in Hong Kong, wrote in a note today. “We would see any
resulting price weakness as a sensible time to add to
positions.”

Foxconn spokesman Edmund Ding didn’t answer calls to his
mobile phone. The company, which is working with local
government officials to investigate the cause of the explosion,
has declined to comment on the details of the accident beyond
the statement.

‘Serious’ Condition

“All operations at the affected workshop remain suspended
and production at all other workshops that carry out similar
processing functions have also been halted pending the results
of the investigation,” Foxconn said in its statement. “All
other production operations in our facilities in China continue
operating normally.”

Sichuan Provincial People’s Hospital has admitted four
workers in “serious” condition with large areas of their
bodies burnt, said Li Wei, a doctor at the hospital burn unit,
said by phone today. He declined to comment further.

Apple, the world’s second-biggest company by market value,
said it’s in contact with Foxconn to investigate the incident.

“We are working closely with Foxconn at this point to
understand what caused this terrible event,” Steve Dowling, a
spokesman for Cupertino, California-based Apple, said in a May
20 phone interview. “We are deeply saddened by the tragedy.”

The $2 billion plant where the explosion took place opened
in October, Xinhua reported May 20. The facility makes Apple’s
iPad 2, the Beijing-based Economic Observer reported on its
website, citing unidentified company workers.

Police in Chengdu said they concluded preliminarily that
the explosion, in a polishing workshop, wasn’t intentionally
caused, China News Service said.